A former chief executive may have to pay out £750,000 in damages if she loses a landmark legal battle after she spent 18 months off sick in her high-flying council post.

Cheltenham Borough Council will try to sue Christine Laird in a High Court case that is thought will cost the authority up to £5,000 a day in legal fees.

Proceedings were started by the council against Mrs Laird, and her former employer Rhondda Cynon Taff (RCT) Council, last May.

The council claimed for misrepresentation and/or negligent mis-statement in respect of her pre-employment fitness on an employment questionnaire.

Cheltenham council is trying to recover damages believed to be in the region of £750,000 it claims to have incurred following its involvement with Mrs Laird, who spent more than 18 out of 36 months off sick with stress.

Council directors revealed this week they had dropped the claim against RCT in the public interest, but they would still pursue Mrs Laird.

In 2005, the council recovered £96,100 in legal and court costs from Mrs Laird after she lost a case alleging bullying by then council leader Andrew McKinlay.

It is believed the new case, which is expected to last 38 days when it starts on January 26, will be the first of its kind in the UK under new legislation within the 1999 Local Government Act.

A council spokesman said: "Cheltenham Borough Council has discontinued its action against RCT Council for negligent mis-statement in supplying an employment reference for Mrs Laird. Each council will bear its own costs. At the start of these proceedings it was properly considered to be in the interests of the overall success of the case to include an action against RCT as well as Mrs Laird. It has been decided, with the support and advice of counsel, that the public interest would be best served, both economically and in terms of enhancing the prospects of success, for the council to concentrate its efforts in pursuing the claim against Mrs Laird alone."

Councillor Steve Jordan, current leader of Cheltenham Borough Council, said: "The council has taken legal advice from experts and decided to pursue a claim against the former chief executive."

Mrs Laird was embroiled in bitter disputes with the council from the time she took the £75,000-a-year chief executive post in 2002.

She first infuriated colleagues when five long-serving officials lost their posts shortly after she took over.

Mrs Laird was suspended on full pay in June 2004 and accused former leader Mr McKinlay of treating her badly.

Mrs Laird had tried to obtain a restraining order preventing Mr McKinlay entering the first floor of the council's headquarters on the Promenade, where she had an office, but withdrew the application and instead pursed a legal claim against him. She made 25 complaints to the Standards Board of England, all but one of which were dismissed.